Shares of Prologis Inc. (PLD) showed a slight increase of 0.1% in premarket trading on Tuesday following the release of the company's third-quarter earnings report. Although the earnings were lower than the previous year, they surpassed expectations. However, there was a decline in occupancy and leases commenced.

Financial Performance

The net earnings for the quarter were $746 million, or 80 cents per share, compared to $1.01 billion, or $1.36 per share, in the same period last year. Core funds from operations (FFO) decreased to $1.30 from $1.73 but exceeded the FactSet consensus of $1.26. Total revenue experienced a notable growth of 9.4% to $1.92 billion, surpassing the FactSet consensus of $1.72 billion. Rental and other revenue significantly increased by 53.8% to $1.78 billion.

Occupancy and Leases Commenced

The average occupancy rate for the quarter stood at 97.1%, slightly lower than the 97.5% in the previous quarter and 97.7% from a year ago. Additionally, leases commenced amounted to 46.4 million square feet, showing an improvement from the 43.3 million square feet in Q2 but a decrease from the 51.0 million square feet in the same period last year.

CEO Outlook

Chief Executive Hamid Moghadam acknowledged that negative customer sentiment would continue to impact demand until there is more stability in the economy.

Future Outlook and Guidance

For 2023, Prologis Inc. has revised its core FFO guidance range to $5.58 to $5.60 from the previous range of $5.56 to $5.60.

Stock Performance

Over the past three months, the company's stock has experienced a decline of 13.3%. Comparatively, the Real Estate Select Sector SPDR ETF (XLRE) has also suffered a loss of 9.8%, while the S&P 500 (SPX) has slipped 3.3%.

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